of cupcakes. i said, what could i do with these? my wife and i aren't going to eat them all. my staff is far too fat anyway, so, and some of you looks like you could use a cupcake, so that the cupcakes are yours. >> so, a few moments later the republican leader mitch mcconnell. >> i understand that you have been bribed, have you? i have no gifts to offer you, so i expect the worst possible treatment in return. >> kate never brings me cupcakes. we have to go. stay with cnn for the president's complete state of the union address. and erin "outfront" starts right and erin "outfront" starts right now. -- captions by vitac -- www.vitac.com well, bowing to pressure, mitt romney relesions his tax return and it is a 500-page

monster. we killed a lot of trees today, and did it reveal anything? and the re-election campaign of president obama starts tonight. we are counting down to the state of the union. >> the death toll continues the climb off of the cruise ship crash off of the coast of italy. we have video of the search and rescue of the divers. let's go there tonight, "outfront." well, good evening, everyone, i'm erin burnett and out front crunching the numbers in mitt romney's tax returns. here they are. we have flags in here, because i will admit that as we said, i'm not sure that anybody has read all 500 pages here, but this is two years' worth of mitt romney's tax returns released todayment the romney camp yeeling to the pressure on the campaign trail. here is the breakdown. the presidential candidate earned 42.7 million in the last two years. he paid 6.2 million in taxes. and an effective rate of just

under 14%. now the reasons that romney made his money, pretty much all of it from investments which are taxed at 15%, but there is so much more in these 500 pages which is b by the way, we should note is longer that on the book that romney wrote at 416. we went through it all along with the "outfront" strike team which we set up yesterday for this purpose, because we did seriously want to go through this. an elite group of former tax experts, irs attorneys and professors and you see them here and they all responded to the specific questions. they say that mitt's tax return is typical for the politician with his income. i didn't know that there were politicianings with that income, but here is the point. first, there are some red flags, and the first is carried interest. we sounded the alarm and predicted that when we would see it we would see massive carried interest. what's carried interest? that is when you invest other

people's money and get a cut of the profit and pay the 15% capital gains rate. check out the blog to see how it works. carried interest is how mitt romney made $12.9 million in two yea years. he paid $1.9 million in taxes. had it been taxed at 35%, the regular income level he would have owed double, $4.5 million and again, he paid the legal rate. another point for the strike tax team, his off shore accounts. these are the funds in cayman island, and bermuda and a swiss account he closed in 2010. shady or not, tax expert dan shapiro says i was surprised that he has so many off shore accounts that produce so many little taxable income, and why bother with these. and there seems to be something else to it, because that is an obviously question out there. and the third point was blind trusts. a lot of mitt romney's trusts

are in these trusts. so it means that somebody else, other than romney makes decision of where to invest the money, and that allows the politicians to avoid conflicts of interests. there are no tax liabilities there, but when romney was running against ted kennedy, he had this to say about blind trusts. >> the blind trust is a ainge-old ruse to tell the blind trust what it can and cannot do and you give it rules. >> yeah, all right. that might be a problem. but now the tax strike team says that from their analysis romney has paid every tax dollar he has owed a and this is the bottom line. steven moore and john avalon, a cnn contribute to, and yeah? >> the blind trust issue is a big problem after what he said, no question. but you look at the 500-page document and what screams out from this, erin, is can we please have tax reform, and simplicity in the tax system, and by the way, this 500 page,

and the one thing as an addendum to what you said, don't forget the companies that mitt romney owns, because you are right, he gets most of the income from the investments of companies and those companies pay taxes, and their tax forms are four-feet high, and don't forget they pay a 35% rate. that is what i object to in this discussion is that we leave out the fact that those companies paid a tax on the profit before mitt romney or warren buffett got a pepny of the nny of the m >> and john avalon, one thing i wanted to highlight with you, $7 million in charity in the past two years for mitt and ann romney is 16% of the income, and comparison of someone like joe biden gave 1%, and not compa comparison of what is to give, but by all accounts, they were generous. >> that is an important point the make, this is an extraordinarily generous family. and everything they did is perfectly legal. but politics is perception, and the problem that romney runs

into whether it is now or nomination in the general is that this kind of return could make him a symbol and not the growing gap between the rich and the poor, but the growing gap of the super rich and the working wealthy. it is not socialistic to talk about the growing gap, because it has people frustrated in the economic periods, but the constructive response is exactly as steven said, we should have a constructive debate about the tax reform and simplificatiosim and a closer fairer system, and close loopholes like carried interests, and the only people who have carried interests are people who benefit from carried interests. >> and i'm for the lowest tax rates possible as we know, but it is hard to justify that lower rate for carried interests because as you said, you are not gambling with your own money, but someone else's money. >> that has to be the frustration for someone like you that, you know, he didn't do anything wrong, but as a principle when we talk about the tax policy from america, people are benefiting from that and all who are benefiting from that is incredibly wealthy and gives a bad name to shn if you are trying to make a argument for

the dividends to have a lower rate, it gives the concept a bad name. >> the only political way out for mitt romney if he is the republican candidate, and who knows at this point, but if he wins, look, barack obama tonight is going to talk about the buffett rule, and this idea that every rich people should have to pay at least a higher rate than the middle income people, and they probably already do, but the only the way out for mitt romney is to say, blow up the tax system and have a flat tax and you worked on that when you were with rudy giuliani, and there is a real pop liulist for that. >> and he could say i want to prevent this from happening and john, as an argument, look i paid more in charity in the last two years than i did in taxes. >> but to argue against the self-interests. and this is a fascinating nixon and china moment to say, i have benefitted from it, but given the deficits and the debts as a nation, it does not make sense and that is the way to pivot on it politically, because the broader issue is that we are not talking about the democrats may

paint him as mr. 1%, but it is mr. 0.1%, and bloomberg said that the 1% is $380,000 aer yooshgs but he makes that a week off of this passive income. so he has to take the offense to take the attention off of that. >> the one thing that disturbs me, erin, about the whole conversaticon v v versation of bain capital is the idea that someone who makes a lot of money is dedemonizing we creation. and there are thousands of americans who benefitted from the activities and if i were mitt romney i would have said i paid $30 million in taxes over the last ten years and that is a big tax bill on top of the fact that he gave at least that amount of money in charitable contributions. >> put up the screen, because it makes the point of the carried interest broadly, and newt gingrich and barack obama are wealthy guys as well, but you can look at the effective rates.

barack obama with $1.7 million, and he got book royal i the, but newt gingrich with 31.6% and mitt romney 13.9%, and it is the perception. >> it is a flatter and fairer tax system which requires closing the loopholes, and we look at the impassioned debates of the bush tax rates sunnetting and for households with a $250,000 combined income and then you is this example of millions and millions of dollars of passive income taxed at 14% that rightly strikes people as unfair and frustrating. the result is not a demagogue to deal with it, but play offense with real proposals to create the flatter and fairer tax. >> spersing to be aggressive, because he has a plan out there if you make under $200,000 as a couple, i will tax you zero helping retirees and anything over that 15%. barack obama has the lowest rate with coming in around 20%, but he could go a lot further to be

more progressive. >> for someone whos ha worked for tax reform for 20 years, because i think that the tax system is an albatross around the neck of the economy and we can do more from a competitive standpoint. what is reform? broaden the base and get rid of the loopholes and keep the rates as low as possible. >> and throw the irs code in the toilet. >> yes, and bury it and pour the salt on the soil so it won't grow up. with tax reform is higher rates which makes america less competitive in a global situation. >> and thank you to both of you and let us know what you think, everyone. we have been "outfront "/" "on issue, and you can go to our blog to comment more on this. obama's state of the union speech starts in less than two hours. we will get a preview of the message and taxes are part of it. three months after the death of gadhafi and looks like libya's government is losing control. is it possible that gadhafi

loyalists could be taking over again? william cohen is out front. and brand new video from the cruise ship. did wealthy businessmen buy their way on to the lifeboats? we get the facts "outfront." next. try alka-seltzer. it kills heartburn fast. yeehaw! forty years ago, he wasn't looking for financial advice. back then he had something more important to do. he wasn't focused on his future. but fortunately, somebody else was.

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tonight, troubling signs that libya's new government may be losing control. three months since the death of moammar gadhafi, his supporters continue the fight for power, seizing a city from revolutionary forces. it is a deadly battle threatening to tear the country apart and raises fresh doubts to the u.s.'s response to the conflict. many people thought that when moammar gadhafi was dead, everything was over and it would work fine, but it is not. we are out front with former defense secretary william cohen, and good to have you here. >> good to be here. >> this outcome does not surprise you and people looking for the quick fix and he is gone, and this is the largest oil reserves in africa and not getting what they thought. >> well, we tried to point out that once the euphoria dissip e dissipated and we knew it would dissipate quickly, the hard part would start, how to put together a government that is inclusive. libya happened to be the most clan

clannish and tribal of all of the countries. we have 140 clans in libya. most of them supported by gadhafi. and that is how he contained control is by using the iron fist. so now you have a country who has not enjoyed in the past half century any form of institutional government, and so now putting the pieces together is going to take time, and you are bound to have gadhafi loyalists trying to seize the power again, and this is going to take time and we have to watch it closely and work with the current government, and continue to have the international community involved and try to establish as much control as possible. >> obviously, the u.s. when it got involved and nato that the argument was humanitarian. but, there is, the harsh reality that the libya is an oil supplier and not as significant now as it will be as i said the largest oil reserves in africa, but do you see a scenario for the u.s. military for that reason if things completely just fall apart here will be involved? >> well, i can't envision any circumstance that the united

states would send its military in to try to control the oil supply. if it dish mean, there's an old african proverb when an elephant fights, it is the grass that suffers. if the libyan people continue to wage war against each other, the only ones who are going to suffer primarily are the libyans, themselves, and that is their major force of revenue to feed the families and it is not a tourist spot to begin with. so under these circumstances, the libyan people have to understand that at some point they have to reach a reconciliation of the united states, nato, and other european countries and nato countries in the gulf who have an interest of seeing libya get through the period of time. it is going to be difficult and not easy. >> it should be a tourist destination, and that is gadhafi's thing, it would be one of the largest tourist destination in the middle east, because they have some of the most beautiful gulf coast, and ruins. >> yes, and as long as this continues, it won't be. >> what happens with the other question here, the chemical

weapons reserve that gadhafi said he had and international inspectors say he had and the rocket-propelled grenades and the fact that guarding the st k stockpiles are crucial, and that if they come out on the market, there could be threats to the united states or others and does that force the u.s. to act? >> well, we have known about gadhafi having stockpiles and chemical weapons. when i served on the senate intelligence committee in the 1980s, we followed what gadhafi was doing carefully what he was doing with the chemical productions, but since that time, gadhafi disclose hdesed h chemical weapon, so it is not a surprise. the national transitional council made disclosures they have found chemical weapons, so the real issue now is what can be international committee do with the transitional government to make sure that that mustard gas and sulfur don't get loose and into the general community or into the hands of terrorists. so maintaining control over that

is going to be important. i think that the international community is working close oly to make sure it doesn't get into the hands of terrorist groups. >> secretary cohen, thank you so much. we appreciate it. >> good to be with you. the death toll continues to climb in the cruise ship disaster. they recovered a 16th victim today from the capsized concordia. 16 people are still missing including an american couple. authorities released video of the search and rescue effort. you can see it there. and more video of the night when the ship ran aground, and this is amid reports that prosecutors are looking into allegations that a few wealthy russians bought their way on to lifeboats ahead of women and children. dan rivers has been covering the story in italy from the beginning, and he has the latest for us. dan, good to see you. a lot of americans have seen in the newspaper today stories that people on the ship saying that wealthy russians were literally

giving cash to the lifeboat op rayers to and getting on before children and women. do you have any sense as to whether that happened? >> well, i mean, it is certainly a great piece of copy, erin. it has been picked up by the "huffington post" and the "wall street journal" and both credible titles, but if you read quickly, they quote the german ne media who are quoting the german tabloid "the bilt" who is saying that well-dressed russian men and women were coming off before women and children which gives rise to the story that perhaps the well-dressed russian men and women were bought their way off first. there is no credible sourcing here. there is some suggestion that the italian pros ecutors have testimony from passengers on board who are corroborating this, but no one else we have spoken to has confirmed this, and the prosecutors are not

talking to it either. >> let me ask you about the search and rescue mission started again and i know that you were covering that and a woman was recovered. do you know any sense as to how much longer that i will keep look and whether they think that anyone might be alive? >> they are saying that they can carry on doing both, salvage and search and rescue, at the same time now. realistically, there is no chance now of finding anyone else alive. this is now a search for bodies, sadly. the search underwater has been hampered by movements of the ship. they have sensitive equipment now trained on the ship checking on how much it is moving, and they are confident it is safe to get the divers in again. so that's been continuing. >> dan rivers thank you very much reporting from italy tonight. all right. it is called the buffett rule, and president obama says it will require the wealthy to pay more taxes. how will it play in tonight's state of the union? and nine films nominated for best pictures going into the

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besides the election, there's another contest going on right now, the oscar nominations were announced today. during this morning's telecast the movie "hugo" received 11 nominations the most of any film. but eight other films received enough number one films to be the best picture contenders.

in addition to the prestige that comes with the nomination, it also means big bucks for the lucky films, which brings us to the number $23.3 million which is how much more money on average the best picture winners earn after they were nominate in order the academy award between 2006-2010. the numbers were krcrunched by research firm called ibis world. the best picture oscar winner received 22% increase in box office revenue when it was nominated. last year, the box office bump was pretty obvious and all of the movies in theaters when last year's nominations were announced had significant increases on the day they were nominated. now the numbers were fickle and did not hold to the weekend. but movies like "127 hours" and "winter's bone" added to the attention. i might check that out. a year late.

and last year "king speech" saw the revenue drop 60% after they won the oscar. maybe it went into dvd or online or who knows, but it is an honor apparently to be nominated. speaking of the numbers, apple, big, big, big numbers today. a record number of ipads and iphone iphones. we have that and more on the outfront five and 90 minutes away from the state of the union so what is the president going to talk about? this is a crucial speech for the re-election, and his communications boss comes out front to tell you first. men with erectile dysfunction can be more confident in their ability to be ready with cialis for daily use. even if it doesn't happen every day, you can be ready anytime the moment's right, because you take a clinically proven low-dose tablet every day. [ man ] tell your doctor about all your medical conditions and medications and ask if your heart is healthy enough for sexual activity. don't take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. [ man ] do not drink alcohol in excess with cialis.

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we start the second half of our show with stories that we care about and focus on our own reporting and do the work and find the "outfront" five. number one, mitt's taxes. his returns were released today to give us a glimpse for one of the most wealthy men to run for president. he made $42.7 million, and ekttyly had a tax rate of 14%. it is 500 pages. they note that 3/4 of americans pay that rate or less. but they also say that mr. romney needs to disclose more about his blind trusts. number two, idaho man charged with trying to assassinate president obama pleaded not guilty today. one of the producers in the courtroom said that oscar ortega hernandez did not say anything, but nodded to the judge. he is accused of firing a

assault rifle outside of the white house. he referred to the president as the devil and the anti-christ. number three, the world's new airport hub, a record 51 million people traveled through dubai international airport. one analyst says if dubai continues the grow that way, it will be the world's number two airport, behind london heathrow. and that is why it is call ed the middle east. and apple crushing earnings bringing in $7 billion more than anyone expected. it is hard to explain the scope of beating estimates by that magnitude. that is pretty incredible. apple's first order of 2012, the best in the history of the company said it sold a record 37 million iphones and 15 million ipads and that is the first quarter that the company has operated without steve jobs. it has been 172 since america lost the top credit rating, and what are we doing to get it back? well, the international monetary

fund is warning that if the european monetary situation is worse, it will affect the u.s., and they kept the forecast for the u.s. at 1.8% growth. that is not great, but it is not a negative number, and the difference of a 1.8 and negative number in terms of jobs is hundreds and hundreds and hundreds of thousands. we are getting a preview of president obama's state of the union address. the president will be calling for an economy in a way that everyone plays by the same rules and he says he intends to fight obstruction with action. make no mistake, this is the beginning of the campaign season. coming "outfront" tonight, white house communications dan pheifer. good to see you. >> good to see you, erin. >> you have ignite, and i want to get to the politics of this, because i know it is important, but first, way bt to ask you about the policy. is the president coming forth with a specific new proposal about anything in terms of the policy that he wants to put in front of congress tonight? >> yes. new proposals and a whole host

of areas, and new proposals to call for new era of manufacturing, and creating jobs here and encouraging in-sourcing and discouraging out-sourcing and talking about giving skills to american workers and talking about americans paying their fair share when it comes to taxes in the country. so there is a whole host of new policies and it is a specific blueprint for what we refer to as a america built to last. >> go ahead. >> well, basically what the president is going to talk about is a make or break moment for the middle-class. you saw in the speech in kansas last month when he talked about everybody having a fair shot. everyone playing by the same set of rules and you will see tonight how we get it done. >> let me ask you about the end, because i assume that taxes will come up since warren buffett's secretary is going to be in the audience? >> yes. >> and what specifically can you tell us about this? a specific rate that you can

propose for wealthy americans or what? >> well, i will leave a lot of the details to the president tonight, and it is never a good idea to get ahead of your boss on the state of the union night. >> fair point. >> i want to be able to be here next year doing the same thing. but i think that what you will hear is more details on what we refer to as the "buffett rule" to ensure that millionaires don't pay a lower tax rate than the middle-class, a nnd he will offer specific details of what that looks like tonight. >> what about the details of the, dan, the issue of the buffett rule that mitt romney would let couples making under $200,000 zero percent, and is that something that the president's plan would consider? >> well, i don't want to get into the details right now, but there is a bigger issue here, and that is, is everyone going to pay their fair share? will we ask millionaires and billionaires to pay their fair share? is it the right thing for middle-class americans to pay a

lower tax rate where people pay lower who make millions of dollars? the president does not think so, and he will talk about that and you will hear specifics on the buffett rule. >> let me ask you about something that the senate majority leader mitch mcconnell said. he was pretty clear on what president obama will say today. >> the goal is not the conquer the nation's problem, but it is to conquer republicans. the goal isn't to prevent gridlock, but to guarantee it. . >> the president obviously blames or mcconnell blames the president for what everyone agrees is a washington broken congress. will he respond to that charge tonight? >> well, two things. i encourage senator mccome and everyone to hear what the president has to say. and he will talk about the best thing for the country is for the democrats and the republicans to come together to do common sense things to grow the country and help grow the middle-class. it is worth noting the irony in the statement since senator

mcconnell said that his number one priority was not creating jobs or helping the middle class or spurring growth, but defeating president obama. so we have tried to work with the republicans and we will continue to try to do that and finally in year, we are hoping that they will be a willing partner with the president. >> the president, and you keep talking about the politics of the middle-class, and building a middle-class. the republicans called that talk the politics of envy. about trying to take from those who have. how does the president avoid being seen as inciting clas warfare? >> well, he will address that directly tonight. it is not about envy, but math. the question is that no one is thinks that the wealthy should pay their fair share because we are jealous of the success and somehow the middle-class is jealous millionaires. that is not what this is about. we do what we have to do as a country and pay down the deficit and don't deal with the deficits and fund the governments by eliminating medicare and cutting education and clean energy, and the things that the middle-class

needs to thrive. it is a math question. >> all right. thank you, dan pheifer. i know you have a busy night ahead. >> thank you. >> john avalon is back with me, an i want to talk about the whole congress side of this and congress not doing anything, but first i want to ask one point, because i think it is going tom can down to this politically, how do you define the word fair? >> important question. >> it is implicit that it is not fair, and how do you get around this democrat or republican? >> well, the administration is putting a lot of importance of the phrase fair share and it is open to debate, because they need to make a case of what they want to do is to get rid of cheating and close the loopholes and fairer tax system and simplify case, but if it smacks class warfare, people quit listening, and he has to look about what a second term will look like. he can't run against congress, but he has the propose solutions with such partisanship.

>> and he has the do-nothing congress, and god knows that the american people agree whether it is doing nothing or not doing what they like, but it is the approval of the rating in the polls is 11%. >> right. >> what can he do here to, i mean, congress is an easy target. >> yes, it is. this is the old harry truman playbook, run against the do-nothing congress. this is not a solution. the president when he campaigned promised to be the person who could bridge the divides and he sun able to do so and you can argue, because of obstructionism of the house republicans or the tone was set ip correctly from to get go when the democrats had unified control of washington, but to admit that is to admit failure so that the president has to say, we have a problem that is deeper than any one president, and who is here one year from now whether it is republican or me, the problems will be here unless we heel the endemic problem, and take on filibuster reform, and ending the secret holds and the up or down votes, and the things that affect the tyranny in the minority and get to

hyperpartisanship and you have to get to the heart of it. that is a challenge for the president, and not the defend yourself as a defender of the middle class. you won't tear people down there, but to get rid of the gridlock and the hyperpartisanship. >> can he be seen as the champi yop of the middle-class when you have people like jeff hensarling saying this. >> the president's policies have failed. that is why he is resorting to the politics of division and envy. >> his policies have failed, and as a matter of fact his policies have made the economy worse. the politics of envy, and dividing our country is not what america is all about. >> division and envy. they have the talking points coordinated. >> yes, those are talking points. so immediately take that major discount. the president can make a case that the economy is better than three years ago and he needs to take talking points at what they are, and cynical political tactic and say, define the common ground that exists and build on any given issue, and people playing politics that is

what prebutales are for. >> thank you, john avalon and fair point, and of course, the state of the union begins soon. now let's check in with anderson cooper who is going to be counting us down into the state of the union. >> yes, erin we will be live from 8:00 to the state of the union and then live to midnight as we cover the response, and the republican response and the campaign aides say it will be an attempt to frame the campaign message and put a shift from the economy to put a negative spin of what life would be like with republicans in the house. so we have a panel to sift through the speech, and gop response. we will speak with the tea party representative jim dement, as well as david plouffe. and we will also see how main street america reacts to the speech as we show approval of main street republicans and democrats and independents a. lot at the top of the hour,er

rip. >> i love the dial testing. that is going to be fascinating. wolf blitzer is also coming "outfront" with his preview of the speech. and then, in one blinding blink of an eye, their tree had given its last. but with their raymond james financial advisor, they had prepared for even the unthinkable. and they danced. see what a raymond james advisor can do for you.

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it is the most coveted seat in washington, d.c. tonight, a prime spot next to the first lady as the president delivers his state of the union address. now the seats next to michelle obama also tell us everything about the president's political strategy. one of the guests tonight is warren buffett's secretary, and she is going to get a special mention from the president as he speaks about what he sees is tax inequality and the so-called buffett rule. the president is determined to get wealthier americans to pay more taxes after the billionaire investor said he was paying lower tax rate than his secretary. and joining us are nancy f photenhaure and james carville. the president says that mr.

buffett gets most of his money from investments, and statutory and not effective, and that makes his tax rate lower than his secretary. what do you make of that? >> well, it is an illusion, and what you hear quoted does not reflect the 35% already taxed through the corporate tax rate. so, their income tax rate on top of that is a double-taxation of the income tax dollars earned which is not expressed. that is why when you look at the data the top 1% pay 40% of the income tax revenue even though they earn 20% of that money. >> james carville, but more than half of americans agree that the capital gains and dividends should be taxed at the same rate as ordinary income, and it is an issue front and center, and nancys that it is true, that the

top 1% pays 40%. >> because the income has gone up, and you know, by about 450%, where ordinary people's income has gone up 20%. but, look, one thing that we can say is that newt gingrich and mitt romney agree that mitt romney's taxes are too high. they want to cut it more than that and they believe that the social security checks are too high, and they want to cut them. so if you think that a cut in social security, and a cut in mitt romney's taxes and they want to deliver on both of those, those, and that is a fact. >> the end goal here is economic growth and job creation. we should have zero capital gains tax, and the last thing you want the do is to penalize the savings and investment, and if you tax it less, that is going to create job growth. >> george bush cut the taxes on rich people and created 10 million jobs, and are we arguing

this? i mean, i can't believe people get on television and say that arguing that giving mitt romney a tax cut on his money in switzerland is going to help people. >> and we are arguing it would help people, and clean up the code and get rid of the special permission, and make it more transparent and i have not seen mitt romney embrace it, and i would feel better about it if he did. that is what needs the be done. >> you think that mitt romney pays too much in tax, and i don't think he makes enough. >> james, you are not acknowledging the 35% effective tax rate that occurs that is the corporate tax rate. he pays the 15%, on top of the 35%. >> sorry? >> would you like me to address that question. let me say that few companies pay 35%, and let me say that you conservatives say if you raise the corporate tax rate, they will pass it off to the customer, and so you want to say they never pass eed it off to t customers and only the

shareholders and the whole argument and i have a lot of respect for you, but the whole argument falls apart. and america compared to 35 countries don't pay that high when it actually comes to the tax they pay is not overly high, and they do pass a lot off to the customers a it does not go to the shareholders. >> all fair points an it is higher than a lot of countries even with the effective rate, but it is a lot lower than 35, and you right on that, but james, one i want to throw out to you and i want to know how you interpret this, because of the plans out there, and this is important for the terms of wealthy people, and retired people. under mitt romney, if you as a couple make under $200,000, your current tax rate would be zero, and tax everyone else at 15%. the president would increase the rate from 15 for the lowest to 20, and then as high as 25%. so -- whose plan is more progressive? >> i have to go ahead and do the sort of calculation, but if you

look at what the president is overall proposing, it is a more progressive plan, but the point is that the wealthy in the country have seen all of the income gains and yet their taxes have gone down in the last ten years and it utterly makes no sense to me, but it is a real simple thing, if you think that 13% for mitt romney paying is too much, vote republican. if you think he is not paying enough, vote democrat is all i am saying. >> james has a fair issue, on this, right? if people buy think you can tel mitt romney felt uncomfort about this in the back and forth with the nbc debate with newt gingrich. it feels a little off for the rate to be that low for someone so wealthy, doesn't it? psychologically, intellectually. >> intellectually, it's about your effective tax rate. when you're talking about capital gains and dividend income, you're talking double

taxation. the death tax, the government's third bite at the apple. the buffet rule or derivation thereof has been applied in california and what a dismal failure it's been there. why on earth would we apply it on the national level when he's lost a million public sector jobs on his watch, obama. it's good bumper sticker politics, lousy policy. >> final word, james. >> poor mitt. you're paying too much at 13.9 and nancy and all the republicans want to come in and take you down to zero. maybe you won't have to pay any taxes, mitt. let's have a nice country. >> you said mitt romney wins if he's president and wins if newt gingrich is president because newt would put him at zero. did, to be fair, did he say he did not think it was appropriate by his tone, still, winner either way. >> what a guy. >> power or money, you get one

or the other. thanks to both. appreciate it. >> thank you. >> we are just about an hour away from the president's state of the union address. wolf blitzer has covered a couple of these before? >> a few. >> just a few. wolf is with us tonight. because you have been covering these years and years, what do you think the president needs to do tonight? >> he needs to convince the american public the country is moving in the right direction. i suspect he's not going to say the state of the union is strong or state of the union is good but he'll suggest it's getting better, stronger. there has been job creation and improvement in the private sector. i think he will tout some achievements in the past three years. my sense is there's frustration at the white house they haven't done a great job communicating to the american public what they have achieved and let the dialogue be manipulated by their

opponents and as a result, they have a lot of work to do to convince the american publishing things are moving in the right direction. is the country moving in the right direction or wrong direction. if most americans think the country is moving in the wrong direction, the incumbent's going to lose. he has to convince the american public the country is moving in the right direction. >> it's a tough line. we've been talking about the economy and job market. over the past year, the president can say unemployment was 9.5%, now down to 8.5%. that's an improvement. he can hardly tout that given 8.5% is unacceptably high and people are in jobs they don't want to be in and want better jobs. it's hard to take credit for the economic improvement, isn't it? >> he's not going to say the economy is good and the 8.5% nationally is good. he will say it's bad and there's still an enormous amount of work to do.

what he will suggest is he has a plan to make it better to see things improve. the republicans would just go back to the economic policies he says caused this great recession and he will make that case strongly not only today but the three days that follow, he's going to several battleground states to start make his point, arizona, colorado, michigan. not by accident these states are critical if he's going to be re-elected. what we will hear from the president tonight is out-lining campaign themes he will be speaking a lot about over the next several months. >> i want to ask you about some of the fun things. there's questions sitting mixed democrats and republicans and we're waiting to see who will get the aisle seat when he walks through. what can you tell us about some of those more fun items? >> i know there are some members of the house literally staked

out an aisle seat 8:00 this morning. elliott engle, democrat from new york, wants to be the first to greet the president when the sergeant-at-arms says, mr. speaker, president of the united states. there's always a handful, dozen members who come really really early to stake out a good aisle seat to get themselves on television. >> it's not quite like the lines to get a new ipad or something but more in that direction. >> if it makes you happy, it's a good thing. i've spoken to congressman engel about it. it's a tradition, does it every year. he loves doing it. if you want to spend all day blocking out a seat, that's fine. >> if you have that kind of dedication, you deserve the seat. is there any from the cabinet that won't be there tonight? >> yes. but they haven't announced who that person is, supposedly for security reasons. i suspect fairly soon, we'll see who that one cabinet member who

will literally be in charge of that anywhere football, god forbid if anything were to happen, i'm up on capitol hill myself right now, there has to be someone who would have the continuity in government, if you will. i have spoken to other cabinet members who have that responsibility. they take it very seriously. during the clinton administration, i spoke to the director of agricultural, don't go to capitol hill, you're in charge of capitol hill and walked him through the contingencies if something were to happen. they take it very seriously. i don't know which cabinet member will have it tonight. >> very interesting. a lot of people may not have realized that. is there a different place that person waits or certain protective place they wait? >> i better not say. i think i know where they hang out during the, let's say, three hours or so, that they're here. >> yeah. i guess appropriate you wouldn't

say. pretty interesting. i think a lot of people may not have realized that or interpreted it in that way. thanks, wolf. >> thanks. >> we'll be back tomorrow at 7:00. special coverage of the president's state of the union address is next. cut! [ monica ] i thought we'd be on location for 3 days -- it's been 3 weeks. so i had to pick up some more things. good thing i've got the citi simplicity card. i don't get hit with a fee if i'm late with a payment... which is good because on this job, no! bigger! [ monica ] i may not be home for a while. [ male announcer ] the new citi simplicity card. no late fees. no penalty rate. no worries.